[Federal Register Volume 73, Number 31 (Thursday, February 14, 2008)]
[Notices]
[Pages 8665-8667]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 08-679]


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ENVIRONMENTAL PROTECTION AGENCY

[FRL-8528-9]


Revised Renewable Fuel Standard for 2008, Issued Pursuant to 
Section 211(o) of the Clean Air Act as Amended by the Energy 
Independence and Security Act of 2007

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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SUMMARY: Section 211(o) of the Clean Air Act (CAA or the Act), as 
amended by the Energy Independence and Security Act of 2007 (EISA), 
requires the Administrator of the Environmental Protection Agency (EPA) 
to annually determine a renewable fuel standard (RFS) which is 
applicable to refiners, importers and certain blenders of gasoline, and 
publish the standard in the Federal Register. On the basis of this 
standard, each obligated party determines the volume of renewable fuel 
that it must ensure is consumed as motor vehicle fuel. This standard is 
calculated as a percentage, by dividing the amount of renewable fuel 
that the Act requires to be blended into gasoline for a given year by 
the amount of gasoline expected to be used during that year, including 
certain adjustments specified by the Act. In this notice we are 
publishing an RFS 7.76% for 2008. This standard is intended to lead to 
the use of 9 billion gallons of renewable fuel in 2008, as required by 
amended section 211(o). This standard supersedes the 2008 RFS that EPA 
published on November 27, 2007, before enactment of the EISA.

FOR FURTHER INFORMATION CONTACT: Chris McKenna, Environmental 
Protection Agency, MC 6406J, 1200 Pennsylvania Ave., NW., Washington, 
DC 20460; telephone number: 202-343-9037; fax number: 202-343-2801; E-
mail address: <a href="/cdn-cgi/l/email-protection#412c222a242f2f206f2229332832012431206f262e37"><span class="__cf_email__" data-cfemail="dbb6b8b0beb5b5baf5b8b3a9b2a89bbeabbaf5bcb4ad">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 

I. Calculation of 2008 RFS

A. Background

    On November 27, 2007, EPA published a Notice in the Federal 
Register announcing a renewable fuel standard for 2008 of 4.66%. This 
standard was designed to result in the use of 5.4 billion gallons of 
renewable fuel in 2008, as required by CAA section 211(o) at the time 
EPA published the standard. On December 19, 2007, President Bush signed 
into law the Energy Independence and Security Act of 2007 (EISA), 
which, among other things, amended CAA section 211(o) to

[[Page 8666]]

require the use of 9.0 billion gallons of renewable fuel in 2008. 
Today's Notice announces the recalculated standard for 2008, based on 
the volume of renewable fuel that amended section 211(o) now requires.
    In today's Notice we are using the calculational procedure set 
forth in the final rulemaking for the Renewable Fuel Standard Program, 
as we did in the November 27, 2007, Notice. The formula includes a 
variable representing the volume of renewable fuel required by section 
211(o), and EPA is today using that formula with the renewable fuel 
volume for 2008 required by the EISA amendments to section 211(o) to 
recalculate the RFS for 2008. Since the RFS rule establishes clear 
legal criteria for deriving the standard (including specification of 
the formula used in today's Notice, and all data sources), EPA is 
simply applying facts to pre-established law in issuing the re-
calculated final 2008 RFS. EPA is advising the regulated community of 
the revised standard through a Federal Register Notice, without prior 
notice and comment, in accordance with the Clean Air Act and EPA 
regulations.
    The 2008 RFS is calculated by dividing the volume of renewable 
fuels required by CAA section 211(o) to be blended into gasoline in 
2008, by the volume of gasoline projected by the Energy Information 
Administration (EIA) to be consumed in 2008 (including certain 
adjustments specified by the Act). The following equation from the 
final RFS Program regulations summarizes all of the variables that must 
be considered in the calculation.
[GRAPHIC] [TIFF OMITTED] TN14FE08.003

Where
RFStd<INF>i</INF>= Renewable Fuel Standard in year i, in percent.
RFV<INF>i</INF>=Annual volume of renewable fuels required by section 
211(o)(2)(B) of the Act for year i, in gallons.
G<INF>i</INF>=Amount of gasoline projected to be used in the 48 
contiguous states, in year i, in gallons.
R<INF>i</INF>=Amount of renewable fuel blended into gasoline that is 
projected to be consumed in the 48 contiguous states, in year i, in 
gallons.
GS<INF>i</INF>= Amount of gasoline projected to be used in Alaska, 
Hawaii, or a U.S. territory in year i if the state or territory 
opts-in, in gallons.
RS<INF>i</INF>= Amount of renewable fuel blended into gasoline that 
is projected to be consumed in Alaska, Hawaii, or a U.S. territory 
in year i if the state or territory opts-in, in gallons.
GE<INF>i</INF>= Amount of gasoline projected to be produced by 
exempt small refineries and small refiners in year i, in gallons 
(through 2010 only unless exemption extended under 
Sec. Sec. 211(o)(9)(A)(ii) or (B)).
Cell<INF>i</INF>= Beginning in 2013, amount of renewable fuel that 
is required to come from cellulosic sources, in year i, in gallons 
(250,000,000 gallons minimum).

    EISA section 210(a)(1) also states that, ``For calendar year 2008, 
transportation fuel sold or introduced into commerce in the United 
States (except in noncontiguous States or territories), that is 
produced from facilities that commence construction after the date of 
enactment of this Act shall be treated as renewable fuel within the 
meaning of section 211(o) of the Clean Air Act only if it achieves at 
least a 20 percent reduction in lifecycle greenhouse gas emissions 
compared to baseline lifecycle greenhouse gas emissions.'' EISA further 
provides that for 2008 and 2009, any ethanol plant that is fired with 
natural gas, biomass or any combination thereof is deemed to be in 
compliance with the 20 percent lifecycle greenhouse gas reduction 
requirement. Based on the text of this section, which is not an 
amendment to section 211(o) of the CAA and is not covered by the 
rulemaking provision in EISA section 202(a)(1) (amending section 
211(o)(2)(A)(i)), EPA believes that these 2008 requirements are self-
implementing, and therefore immediately effective. EPA intends to 
address the meaning of the term ``commence construction'', and also 
address what transportation fuels other than ethanol from a facility 
fired by natural gas, biomass or some combination of the two satisfy 
the 20 percent lifecycle greenhouse gas reduction requirement, in the 
context of a proposed rule designed to implement the EISA amendments to 
the RFS program. EPA further notes, however, that is unlikely that any 
facilities for the production of transportation fuel that commence 
construction following enactment of EISA will be operational during 
2008. Therefore, the 20 percent lifecycle greenhouse gas reduction 
requirement is unlikely to have a real-world impact for 2008.
    While EISA requires a substantial change in the 2008 RFS, we 
believe that the required renewable production capacity will come on 
line this year. In addition, at current oil prices, we would expect it 
to be economic to use the volume of renewable fuel required by EISA for 
2008. We also believe RINS generated in excess of the 2007 RFS can be 
applied to the 2008 RFS to provide additional flexibility to the fuel 
supply market. However, we recognize that in the short term there may 
be some catching-up required for the distribution infrastructure to 
deliver the required volume of renewable fuel.

B. Data Sources for 2008 RFS Calculation

    The following discussion describes the sources of data for the 
variables in the above equation. For ease of calculation, this 
discussion regroups the terms (G<INF>i</INF>-R<INF>i</INF>) + 
(GS<INF>i</INF>-RS<INF>i</INF>) in the denominator of the above 
equation into the terms (G<INF>i</INF> + GS<INF>i</INF>)-(R<INF>i</INF> 
+ RS<INF>i</INF>).
Calculation of (RFV<INF>i</INF>-Cell<INF>i</INF>), Total Amount of 
Renewable Fuels From Non-Cellulosic Sources That Must Be Blended Into 
Gasoline in 2008
    The EISA amended CAA section 211(o) to require 9.0 billion gallons 
of renewable fuels to be blended into gasoline in 2008. Since the 
amended CAA section 211(o) does not include a cellulosic volume 
requirement until 2013, the amount of renewable fuel required to be 
produced from cellulosic sources in 2008 (Cell<INF>i</INF>) remains, 
zero. Thus the total amount of renewable fuels from non-cellulosic 
sources that must be blended into gasoline in 2008 is 9.0 billion 
gallons.
Calculation of (G<INF>i</INF> + GS<INF>i</INF>), total amount of 
gasoline projected to be used in the 48 contiguous states plus opt-in 
states/territories, in year i, in gallons
    CAA section 211(o) requires the Administrator of the EIA by October 
31 of each year to provide EPA with an estimate of the volumes of 
gasoline projected to be sold or introduced into commerce in the United 
States for the following year. During the development of the RFS 
Program, EIA informed EPA that the projected gasoline consumption in 
``Table 4a: U.S. Petroleum Supply, Consumption, and Inventories'' 
(formerly ``Table 5a. U.S. Petroleum Supply and Demand: Base Case'') of 
the October issue of the monthly Short-Term Energy Outlook (STEO) 
should be

[[Page 8667]]

used to calculate the RFS for the coming year. The October 2007 STEO 
projects that an average of 9.42 million barrels/day of gasoline will 
be consumed in all of the United States in 2008. Multiplying this 
average consumption rate by 366 days (2008 is a leap year) produces a 
total consumption of 144.80 billion gallons of gasoline in 2008.
    Only one non-contiguous state or territory has petitioned EPA to 
opt into the RFS Program beginning in 2008. Hawaii petitioned EPA on 
June 22, 2007 to opt into the RFS program, and EPA approved their 
request.\1\ Thus, Alaska is the only one of the 50 states that is not 
included in the RFS Program.
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    \1\ Letter to the Honorable Linda Lingle, Governor of Hawaii, 
from Stephen Johnson of EPA dated July 30, 2007.
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    In order to calculate gasoline consumption in the 48 contiguous 
states plus Hawaii, we subtracted Alaska's projected gasoline 
consumption from the projected nationwide gasoline consumption of 
144.80 billion gallons. Alaska's projected gasoline consumption was 
calculated by multiplying the projected nationwide gasoline consumption 
in 2008 by the ratio of Alaska's gasoline consumption in 2006 to the 
total U.S. consumption in 2006, based on Table 48, ``Prime Supplier 
Sales Volumes of Motor Gasoline by Grade Formulation, PAD District, and 
State'' gasoline data from EIA's Petroleum Marketing Annual 2006 (the 
final rulemaking used data from Petroleum Marketing Annual 2005). 
According to EIA, Prime Supplier data reflects where gasoline is used, 
rather than where it is produced.\2\ Alaska's projected gasoline 
consumption in 2008 is 0.30 billion gallons. Subtracting this 
consumption from the projected nationwide consumption of 144.80 billion 
gallons in 2008 produces a total consumption of 144.50 billion gallons 
of gasoline in 2008 in the 48 contiguous states plus Hawaii.
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    \2\ Energy Information Administration, Petroleum Marketing 
Annual 2006, Explanatory Notes, Relationship of Refiner and Prime 
Supplier Sales Volumes'' (p. 382).
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Calculation of (R<INF>i</INF> + RS<INF>i</INF>, total amount of 
renewable fuel blended into gasoline that is projected to be consumed 
in the 48 contiguous states plus opt-in states/territories, in year i, 
in gallons
    The projected gasoline consumption in the October 2007 STEO 
includes renewable fuel that is blended into gasoline. This volume of 
renewable fuel must be subtracted from the total volume of gasoline in 
order to calculate the total consumption of non-renewable gasoline. In 
Table 8 of the October 2007 STEO, EIA estimates that 0.755 quadrillion 
Btu of ethanol will be used as transportation fuel in all of the United 
States in 2008. Dividing this energy usage by the high heating value of 
ethanol (3.539 million Btu/barrel), and multiplying by 42 gallons/
barrel produces a total ethanol usage of 8.96 billion gallons 
nationwide in 2008.
    Since Hawaii has opted in, but Alaska has not opted in, to the RFS 
program for 2008, Alaska's renewable fuels consumption must be 
subtracted from the nationwide renewable fuels consumption to calculate 
renewable consumption in the 48 contiguous states plus Hawaii. In 
Chapter 2 of the Regulatory Impact analysis for the RFS program 
rulemaking, EPA estimated that ethanol consumption in Alaska would be 
negligible prior to 2012. Thus, we project renewable fuels consumption 
in the 48 contiguous states plus Hawaii to be 8.96 billion gallons in 
2008.\3\ For purposes of recalculating the 2008 RFS, we will round this 
value to 9.0 billion gallons, which is equivalent to the volume of 
renewable fuel required by amended section 211(o) for 2008.
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    \3\ Table 2.2-21 ``2012 Forecasted Ethanol Consumption by 
State,'' Regulatory Impact Analysis: Renewable Fuel Standard 
Program, April 2007.
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Calculation of GE<INF>i</INF>, amount of gasoline projected to be 
produced by exempt small refineries and small refiners in year i, in 
gallons \4\
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    \4\ Through 2010 only, unless the exemption is extended under 
211(o)(9)(A)(ii) or (B) of the Act.
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    In the final rulemaking establishing the RFS program regulations, 
we stated that we would estimate the combined small refinery and small 
refiner gasoline volume using a constant percentage of national 
consumption. Using information from gasoline batch reports submitted to 
EPA, EIA data and input from the California Air Resources Board 
regarding California small refiners, we estimated this percentage to be 
13.5%.\5\
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    \5\ ``Calculation of the Small Refiner/Small Refinery Fraction 
for the Renewable Fuel Program,'' memo to the docket from Christine 
Brunner, ASD, OTAQ, EPA, September 2006.
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    Multiplying the projected nationwide consumption of gasoline in 
2008 (144.80 billion gallons) by 13.5% results in a total projected 
production of 19.55 billion gallons of gasoline from small refiners and 
small refineries in 2008.
Calculation of RFStd<INF>i</INF>, renewable fuel standard in year i, in 
percent
    Substituting all of the terms calculated above into the equation 
for RFStd<INF>i</INF> results in the following RFS for 2008,
[GRAPHIC] [TIFF OMITTED] TN14FE08.004

    Therefore, the RFS for 2008 is 7.76%. This is the standard 
referenced in 40 CFR 80.1105(b) through (d) and which obligated parties 
apply to determine their renewable volume obligation under 40 CFR 
80.1107. This recalculated 2008 RFS supersedes, and therefore replaces 
for all purposes, the 2008 standard published by EPA on November 27, 
2007.

    Dated: February 7, 2008.
Stephen L. Johnson,
Administrator.
[FR Doc. 08-679 Filed 2-13-08; 8:45 am]
BILLING CODE 6560-50-M


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